The First Fast Fashion Retailer: A Case Study of Zara

The First Fast Fashion Retailer: A Case Study of Zara

1.Introduction

The fashion clothing industry has developed dramatically and expanded branches fast over the past 10 years. "There are plenty of factors of the fashion industry changing which include adding of mass production, modified structural characteristics in the supply chain, desire for low cost and flexibility in design, quality, delivery, and speed of market." (Barnes and Lea-Greenwood, 2006). According to the latest characteristics of fashion industry, fashion retailer not only can gain the advantage of competition but also can offer the fastest fashion trend to the consumers, as a result the new term of 'fast fashion' is produced .

"Fast fashion is a term that refers to affordable basics and disposable trends. It has also been used as a term to describe clothing collections which are based on the most recent fashion trends. The trend for fashion retailers to buy their merchandise closer to the season, and respond to trends as they emerge."

(Doyle, Moore and Morgan, 2006). In order to reduce the time gap between designing and consumption on a seasonal basis."(Ananth and Marshall, 2009).

Recently, fast fashion has been named as a business strategy which means that fast fashion reduces the buying and delivery time in order to satisfy the consumer demands. Fast fashion retailers seek to make more profit than traditional fashion industry. Comparing two different retailers, the traditional retailers replenish original products when the products are sold out; however, the fast fashion retailers produce smaller quantity of products. When they are sold out , retailers fill the products with the latest fashion style rather than the same product which can introduce a new vision to the customers .

The demand for fast fashion is evident from annual reports of retailers. In 2006, after posting sales of $8.15 billion to fellow fast-fashion retailer Hennes & Mauritz (H&M) $7.87 billion, Zara became the number one fast-fashion retailer. More than 50% of Zara's profit was in international retail outlets (Bell, McNaughton and Young, 2001). Zara is a symbol of the fast-fashion retailers and the international fashion industry (Janice and Maura, 2008)

This project will first compare traditional fashion industry and fast fashion industry. In the second section, the project will analyze a case study of Zara which will be further explored into four parts including the promotion, manufacturing, retailing and international expansion of Zara. In the last part of the the evaluation of Zara business strategy will be mentioned .By doing this, I hope to discuss the case of first fast fashion retailer -Zara in order to know the successful reasons of Zara industry.

2.Comparison Of Traditional Fashion Retailer and Fast Fashion Retailer

2.1Traditional fashion Retailer

In the 18th century, "haute couture" was popular in France, which was the first country with fashion industry. Moreover, the term of "haute couture" was created by law in France. In traditional fashion, retailers were focusing on the customization, which took a long time to produce clothing. Therefore, the clothing's cost was high, and retailers would raise the price of clothing to earn the turnover. As a result, traditional fashion retailers focus only on specific customer groups, who have high income and high society position.

On the other hand, since haute couture products have the potential of establishing new fashion icons for the following season, time-consuming process of designing and producing are worth putting the efforts in. However, the risk is relatively higher should customers dislike this season's design, thus decreasing the retailers' profitability. In addition, traditional fashion retailers constantly manufacture a large amount of clothing in order to enhance the turnover. Nevertheless, customers tend to consider that the products will have upcoming discount seasons, hence they will not purchase the latest products immediately but wait for discounts.

2.1 Fast Fashion Retailer

When it comes to fast fashion retailer, it aims to decrease cost and time. When television commercials or celebrities demonstrate the latest clothing or fashion, fast fashion retailers will instantly duplicate and manufacture accordingly. The reason why these retailers can make an impressive profit is because the clothing they sell is not only the latest trend to interested customers, but also being sold at a reasonable price. Moreover, the products will be produced in small amounts each time in order to convey a simple message, which suggests instant purchase upon facing the scarcity of goods.

Another advantage is when the products are not selling well, it will not affect the final profit. With the products being launched too quickly, it might leave a great room for improvements; for example, if the cutting and designing are not suitable for the general public, fast fashion retailer must constantly listen to their customers and immediately make changes in designing and cutting. Moreover, fast fashion retailer is usually partaking the role of "a follower," which means that a fast fashion retailer can only follow the fashion, and not create it.

3. A Case Study Of Zara

3.1 The background of Zara

Zara is a clothing brand, and the clothing chain store retail brands ,which originated in the small town of Western Europe. Zara was created by 70-year-old man whose name is Amancio. In 1975, Amancio had a sensitive sense of fashion and he opened the first Zara store in the street which became the most competitive in women's fashion industries; therefore, the robust Zara became the Inditex Group in 2000. Today, Inditex Group is a big company which not only owns over 8 billion dollar fund but also the first in the ranking of fashion industries. Inditex Group owns nine apparel retail brands including Zara, Pull and Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home and Kiddy's Class. Zara is the most famous brand and the flagship brand of Inditex Group. At present, Zara has already spread in over 50 countries with more than 680 stores, and increases around 70 branches in every year. Although the Zara branch stores account for only one-third of the number of all the branches in Inditex group, its sales have accounted for 75% of total Inditex sales.

In the disappearing middle class,